Being well informed is crucial for any investor

The information is at the heart of the job of Manager. Being well informed is crucial for any investor. Others believe that you are, wrongly or rightly, can be also very profitable, as demonstrated by the great move of Nathan Mayer Rothschild at the battle of Waterloo (read below).

To establish a reliable network of informants from all backgrounds (analysts, vendors, officers, ex-camarades of University...) allows to better understand the complexity of the markets and be better other. Left to sometimes cross the white line (see page 28 on "hedge funds").

In recent years, Internet burst into the daily of the Manager and the particular investor. If he multiplies the potential information sources, it also increases the risk to be manipulated, through for example the fraudulent spam (read below).

An invitation to caution and selectivity, which recalls that the ability to properly treat and analyze all new increases not mechanically with the amount of information flowing in the market. It was sometimes the opposite: excess supply blurs the benchmarks and complicates decision-making.

The ex-analystes financial managers take advantage of their network

The management of assets and the brokerage are sometimes porous. Thus, for example, financial analysts at broker can pass across the "barrier" by becoming the fund managers. 150 have been identified across the Atlantic, who ran about 6 of the total equity (1993-2006) assets, according to a study (1). It assesses how they take advantage in their new function of their former network of relationships developed with companies when they officiated at their broker (broker).

Values that Manager covered in his previous function have a weight twice stronger than other titles in its portfolio manager. They also record far superior performance to others, by 18 per year. Manager holds these titles than the other and draws the bulk of their performance at the time of the announcements of results, that it seems much better anticipate that the rest of the market. Relationship developed with the management of the companies in his previous profession of analyst, the Manager may have better access than others to these companies and enjoy for its portfolio. To show that this is the case, the author of the study puts forward two arguments. When the change management, the Manager ex-analyste won more money on the title of this society, in accordance with the idea that it is the "intuitu personae" relations developed over time with these leaders who are at the origin of "leakage" of information. As time flows and management relations have strained, ex-analystes managers seem to gradually lose their privileged access to information. Second, performance on the values that he followed as an analyst has decreased considerably since the implementation of the "Regulation FD", which prohibited, across the Atlantic, companies focus on one type of investor in the provision of information. Less the value is covered by the analysts of the brokers, more the ex-analyste Manager will draw gains high his privileged access to the management.

The Alumni and University classmates

What can tell a Manager and a leader, all two former comrades of promotion of Harvard, when they occur Not only the memories of their student prowess... This is what suggests a (2) study from 1990 to 2006 in the United States. It demonstrates that a Manager will invest much more easily and in a society that his "top management" will have attended the same University as him strongly. When a leader is the same promotion that the Manager and it has the same degree, this effect is even stronger.

Relational networks of former students thus play a role in the decision of a Manager to invest or not a company. Thus, when a new manager takes a portfolio, reduce significantly its investments in the "network" of its predecessor companies to buy its own network. This strategy to focus on his "own" reports: a portfolio consisting of the values of the network of relations Manager saves a superior performance of 8.4 per year to a portfolio of securities of companies with which it has no connection. This "relational bonus" is valid for all types of funds, but it is particularly strong for the Fund of funds managers, which have a multiplier effect of their connections. Behind this large, updated for the first time, the authors of the study questioned these incestuous relationships. Are they not the manifestation of insider The information provided to managers at these "friendly" and informal meetings have a privileged status, including for the assessment of beneficiary perspectives of the company. That confirms the observation that it is the announcement of the results of the company of his "network" that the Manager is rewarded his investment: confidential information he had received previously is then disclosed to the whole of the market, what makes go up or down the value, often strongly.

Attachment to leaders

Managers are more that one might think, especially on the segment of small and medium-sized companies. They tend to follow the management when he leaves his business. They then significantly reduce their participation, or the full way to invest in the company joined the starters. This is what shows a (3) study in the United States for the period from 1991 to 2003. This phenomenon of followership is even more clear when members of the "top management" leave the company and join a company whose characteristics are similar to their previous employer in terms of sector, organization... Managers will be all the more readily a leader that has been proven. The reaction of the title of the society to the announcement of the arrival of the new leader is analysed as a vote of confidence or distrust: If this reaction of the market is favourable, Manager will be encouraged to invest, with the confirmation that it is not the only one to be seduced. One year after the departure of one of the members of the "top management", a Fund on two has however maintained its participation. A manager who was shareholder of the company has two times more likely to invest in the new company joined the management Manager lambda who had no interest in his old company. Stock-market performance of a company high and low rates of follow-up on the part of its historical managers are not very different: the attachment makes it also a little blind.